Tai Ship Investment Limited received two projects tender namely "Project Iron" and "Project Silver". We can select only one of above project in the coming few years due to limited resources and cash flow restriction. The newly recruited Financial Controller reported his duty last week; he will perform the feasibility study based on capital investment decision method to select the better project for the company. The cash inflow / (outflow) for two projects of Tai Ship Investment Limited is given below: Project Project Iron Year Silver $ $ 0 (13,700) (13,700) 1 6,250 10,667 2 4,250 3,033 3 1,670 2,165 4 1,530 258 5 2,595 121 1. Note that year 5 includes scrap value of $128 for Project Iron. 2. The company is estimated that the scrap value of the Project Silver will be $51, to be received at the end of the eighth year. Required: a. What is meant by the term of payback period? What is the major criticism of the payback period in making capital budgeting decisions? (4 Marks) b. Calculate the payback period for above projects. Assume the required payback period is three years, which project should you accept and explain? (3 Marks) C. Establish the net present value (NPV) of the above projects assuming that the discount rate at 12%. Which project should you accept and explain? (8 Marks) d. All discounted cash flow (DCF) measures use of cash flows and make use of the concepts of the time value of money. Please evaluate the following terms: i. Use of cash flows; ii. Time value of money; There are two main discounted cash flow methods such as net present value (NPV) and internal rate of return (IRR). Please compare and contrast these two methods. (10 Marks) (Total: 25 Marks)